Are you taking advantage of these community banking trends?

Many years ago, a downstate Illinois bank president argued against installing a new device called an automated teller machine. He asserted bank patrons preferred humans to machines. 17-LB-550 blog stock photoYears later, the banker used the anecdote as an ice breaker in speeches, poking fun at himself for failing to spot an important banking trend. 

Let’s take a look at 3 key community banking trends that can benefit your company:

  1. Fraud prevention - Community bankers have become increasingly vital partners in helping companies prevent fraud and maximize security. Seek out your banker for a candid discussion about cutting-edge fraud prevention strategies. Such programs may include positive pay, ACH blocks and filters and other approaches that can help safeguard your company against unauthorized transactions.    
  2. Advanced mobile banking - Increasingly sophisticated mobile banking options are allowing companies and individuals to save time and money. They include access to real-time account balances, transfers, initiate bill pay, confirm ACH and wires, mobile deposits and customized text messaging options.
  3. Greater local involvement - You’ll find community banks placing a greater emphasis on “lending a hand”. From supporting local commerce associations and charitable organizations to conducting financial education programs to help schools and businesses, community banks strive to improve quality of life in their market areas.

Today, community banks provide fresh levels of responsiveness with better digital technology and personal service. Proactive executives take advantage of these trends to make their personal and company’s financial goals become a reality.

What banking trends are most important to your company?  

What to know to avoid a ransomware attack.

17-LB-549 Ransomware blog photoIn one of the most infamous ransomware cases, hackers hijacked the system of California-based Hollywood Presbyterian Medical Center (HPMC). The attack made it impossible to access the center’s network or patient files. After a payment of $17,000, access was restored. But by that time, HPMC had been forced to exist in a primitive, pre-computer world for 10 full days, with additional incalculable losses.

Ransomware poses a growing threat to business. In one recent 10-1/2-month stretch, ransomware incidents increased six-fold over the previous year.

There are several steps companies can take to reduce the threat posed by ransomware, reports Robert Hamaker, Leaders Bank Senior Vice President Operations/IT.

1. Current systems. Maintaining up-to-date operating systems is key, Hamaker says. Also, “keep patches on all software up to date,” he adds. “Update or replace computers/servers that run unsupported operating systems. Make sure the firewall software is up to date.”
2. Avoid intrusions. Most malware enters networks via suspicious looking attachments to email. “Train your network users not to click on anything that is not expected in their email in-boxes,” Hamaker says. “If it looks like junk, it probably is.”
3. Create a plan. Have a plan in place to deal with malware and virus intrusions, Hamaker urges, adding it’s not a matter of if it will happen, but when it will happen.
Before it’s too late, take the steps necessary to ensure important documents remain usable, and that your company doesn’t have to confront the expense and lost productivity of an attack.

Have you been a victim of a ransomware incident?

How to know the right amount when borrowing.

Maybe your company faces a short-term cash shortfall. Perhaps a key opportunity looms, and you'll need more capital to take advantage. Whatever the reason, like almost all companies yours will likely someday have to borrow to grow. 17-LB-548 Aug Blog1 stock photo

The decision to borrow can be relatively simple. But the issue of how much to borrow can put you on a tightrope. You don't want to become overextended and struggle servicing debt. But you don't want to borrow too little and be unable to meet growth opportunities head-on. Your banker can help you determine an optimal level of debt, based on your requirements and current finances.

Also consider these factors when deciding.

  1. Think long term. The capital borrowed should ensure not just a brief surge, but long-term revenue and profit growth. If you're certain the loan could yield a long-term upward trend line, borrowing more rather than less may make sense. After all, you'll have greater profits in the future to service the debt.
  2. Do the math. Examining the numbers banks scrutinize can help you learn the right amount. The Debt Service Coverage (DSC) ratio for your business determines how much of your cash flow will be left to service debt after paying expenses. To calculate the DSC ratio, determine the amount of cash your business generates monthly after paying regular operating expenses, and divide that number by the amount of the monthly payment for the new debt. If this DSC ratio is significantly greater than 1, you will have shown the Bank that your normal cash flow will provide you with the capacity to pay back the loan. 
  3. Expect the unexpected. Unforeseen setbacks are a fact of life for any business. Before you borrow, consider potential obstacles. Is your debt level already high? Is a slow sales season upcoming?  Scale back the loan amount to allow for disappointments -- some say by as much as half.

Determining the right loan amount is difficult. However, upfront research can help ensure you strike a balance between too much and too little.

How would you determine how much to borrow?

How skillful negotiation can close more sales.

17-LB-547 July blog2 photoConsider this scenario. A sales representative prepares thoroughly before a key presentation. She assembles facts, figures, graphs and samples of her product. She reviews the account history, the value of her solution to the prospective client, and the motivations of parties across the table. Prepared for a wide range of questions, she brims with confidence as she enters the meeting. All the prep work she’s done helps her earn the prospect’s respect and trust -- and the sale.

To facilitate successful negotiations, it’s imperative to know your prospect’s needs and have a clear vision of how you’ll reach your desired outcome. Here are 3 essential techniques to leverage negotiations to gain greater business success.

  1. Be willing to compromise on non-monetary issues. When negotiations on price have gone as far as they can go, be willing and able to negotiate on non-price conditions. Be flexible on delivery schedules or the provision of a new service. Give and take on non-price issues can be the strategy that clinches the deal.
  2. If concessions are given, get something in return. Negotiation should bring a win-win outcome that benefits both parties. If a prospective client requests some concessions, propose an offsetting compromise on his or her part.
  3. Think long rather than short-term. Negotiations shouldn’t be rushed or combative because this usually alienates the prospect. The goal isn’t to gain one sale, but a long-term relationship. Take time to nurture that bond.

Negotiations can be fluid, unpredictable interactions. However, when you focus on building a win-win relationship and expect things to work out, you’ll convert a healthy percentage of your sales opportunities.

What negotiation techniques have you found to close sales more effectively?

How to strengthen security for your business bank accounts

Cybercrime targeted at business banking accounts is a serious issue. Do you know the most effective deterrent?  It is developing a strong partnership with your bank. 

17-LB-546 July Blog stock photo

Community banks are safe havens that protect business customers from cyber theft and other crimes jeopardizing their accounts. But preventing security breaches requires diligence from customers as well as their banks. Working together with your bank, you can go far to stamp out unauthorized access by fraudsters. 

Team up with your banking institution to fully comprehend and implement the security initiatives that best suit your company.  Also work hand in hand with your bank to put into place account safeguards that can help your bank pinpoint and avert unauthorized access to your company’s assets.   

Here are a few specific measures your company should initiate. 

  1. Safeguard your company online. Using unprotected Internet connections can leave your company vulnerable to cyber threats. Maintain up-to-date antivirus and anti-spyware. Ensure all sensitive data is encrypted.
  2. Filter ACH transactions. One way fraudsters may target your company’s accounts is by leveraging ACH to attempt fraudulent transactions. Progressive banks can offer your company the ability to block or filter the ACH transactions on their accounts. With a filter attached, your accounts can be debited through ACH only by companies you have approved.
  3. Match checks presented with checks authorized. Leading community banks provide a service called Positive Pay. Dollar figures and check numbers of checks presented for payment are compared against a list of checks previously issued and authorized, with unmatched checks flagged as “exception items.” 

Secure banking accounts are essential to your company’s survival. Work hand in hand with your bank to make sure they’re as fully protected as possible. 

How are you securing your bank account?

Become a better leader by empowering your employees

The leader of a global organization recognized he needed to give more responsibility and authority to his people. For a year, when tempted to be authoritative, he paused and asked 17-LB-545 Blog photohimself, “Is it worth it?” The lesson taught him half his pronouncements weren’t “worth it.” He improved as a leader by giving employees more control, and exerting less control himself.

Paradoxically, many leaders never really realize their full potential until they learn to empower their staff members. Here’s what you can learn from these leaders.           

  1. Encourage “comfort zone” departures. Give your employees big opportunities and challenges that can empower them. Doing so can help them reach their full potential.
  2. Avoid second guessing your employees’ decisions. Instead, give them the confidence that comes with backing their decision-making. It will give you more time to focus on the overall company vision.
  3. Reward positive performance. Reinforce your employees’ emerging ability to lead by recognizing their efforts and rewarding empowered decisions. It’s a sure way to help them build on successes.

It may be hard to relinquish control to others. But by so doing, you’ll spur greatness in your staff and build employee-employer trust. In short, it’s “worth it.”

How do you empower employees?

How to maximize your community banking relationship’s benefits

There’s an old saying often attributed to an early American writer and philosopher. “In order to have a friend, you have to be a friend.” The lesson applies to relationships in any walk of life. They generally don’t work without effort from both parties.  17-LB-544 May Blog photo

Community bankers live and work in the communities they serve, growing personally acquainted with customers and their needs. But they can’t build great customer-bank relationships alone. Gaining the most benefit from a banking relationship is in part the customer’s responsibility. Adopt these approaches to help build that rapport.

  1. Start with a face-to-face meeting. Arrange a meeting with your bank’s relationship manager at your office or an off-site location. A face-to-face meeting can be a good way to establish rapport and build a foundation for future talks in person or by phone.         
  2. Schedule regular discussions. Conversations about the current state of your business and how your needs are changing can help build a bond.  Once given this input, your banker can respond with adjustments to, or expansions of, current service. 
  3. Treat your banker as business resource. Look to your banker as a trusted advisor and source of insight and feedback. He/she can offer ideas about your financials, business and strategic plans, and can also deliver crucial intel on industry and market trends.   
  4. Prioritize open communication. The sooner you bring your banker into the loop on your hurdles and opportunities, the sooner he or she can offer options to assist you.

 Like we say, “in order to have a friend, you have to be a friend.” Follow the guidelines above, and you will have a friend in good times and -- more important -- in tough times.

What’s important to you in a good community banking relationship?

How CEO peer groups can help you

     17-LB-543 blog photo Whether you’re a CEO, president, owner or partner, it can be lonely at the top. You’re faced with important decisions every day, and it can be helpful to have an objective sounding board of other top executives. This is where CEO peer groups deliver important benefits.

      CEO peer groups, such as Vistage International, Renaissance Executive Forums and Inner Circle, can be instrumental in helping key executives through difficult times brought on by competitive challenges, business growth pains and personal hurdles. In these groups, company owners meet with a mentor and other company owners to help one another with business and personal issues. They often have “industry experts” speak about best practices in areas such as finance, leadership and human resources. Here are a few of the key benefits a CEO peer group can provide:

  1. Strength in numbers.  With the support of a CEO peer group, no chief executive is ever alone. The peers that surround him or her provide strength in the form of crucial insights, advice and personal support.
  2. Tough love.  Group members can hold you accountable to your goals, and provide inspiration when the going gets tough. They can also help you identify your weaknesses, and how to deal with them.  Members can voice the constructive criticism a CEO needs, but may not always receive from people in his or her own company.
  3. Bottom line results. The open exchange of ideas, suggestions and best practices isn't just a good idea. It's also good business. Studies show companies headed by CEOs in peer groups display better-than-industry-average revenue growth and profitability.

     The best evidence CEO peer groups pay dividends? Recent research indicates approx. 80 percent of CEO peer group participants renew membership annually.

     What’s been your experience with CEO peer groups?

Three key factors can make or break acquisitions

Two auto industry examples illustrate how acquisitions succeed or fail. In the first, Daimler acquired Chrysler and smaller shares of Mitsubishi and Hyundai. In the second, 17-LB-542 Merger blog stock photoRenault bought a one-third stake in Nissan. Daimler was stronger than the companies it acquired and could never sync with them. The marriage foundered. Renault and Nissan were similar in size, the acquisition succeeded and Nissan's been revived under Renault's partial ownership.

Ability to mesh well with the acquired/acquiring company is but one factor to strongly consider before proceeding with an acquisition. The following is a short list of strategies to understand when acquiring or being acquired by another company.

  1. Synergy must result. If an acquisition doesn't make the two companies better together than either would be on its own, why move forward? The deal's equation must be not 1 + 1 = 2, but 1 + 1 = 3 or more.  Synergies may flow from the companies gaining greater revenues, realizing reduced costs or achieving enhanced sustainability together.
  2. Collaboration and shared objectives. The acquisition has a far better chance of succeeding if the two companies possess similar goals and can come together to collaborate harmoniously on key aspects of the businesses.
  3. Transition team essential. There must be a top-notch team in place to manage the transition from two separate companies to one entity pulling together.  It's a crucial stage in creating a good cultural fit. The best players must be calling the shots.

Figures show just 25 percent of mergers and acquisitions succeed. Follow the principles above, and yours may be among that fortunate percentage.

What do you feel are the most important keys to an acquisition?

Business necessity can be the mother of reinvention

16-LB-581 April2 blog photoThose who love video know Netflix and Blockbuster. Both became household names, Netflix via a mailed video platform, Blockbuster by opening countless video rental stores. Having reached success, Netflix reinvented itself with video streaming services. Blockbuster did not reinvent itself, and the days when its stores stood on every corner are but a memory.

The example points up an oft-experienced business reality.  After growing for years, a company goes into a growth stall. It could be from misreading technology or buying trends, a stagnation in core demand for products or myriad of other growth-stymying factors. Some argue a company facing this stage must reinvent itself or face extinction. If yours is a company needing reinvention, here’s how to do it successfully:

  1. Look beyond today’s success.  Some companies become convinced today’s robust revenues and profits will continue forever.  That can blind them to emerging market challenges on the horizon. Keep an eye out for changes that could derail your success, and ways to reinvent your company in response.
  2. Hone new capabilities.  Your company’s capabilities and expertise differentiate it from lesser competitors.  Sooner or later, these capabilities will likely become dated. Invest in training, research and development that enable your company to maximize business opportunities that lay ahead.
  3.  Strengthen your company with additional talent. Reinvention also calls for new team members who can bring fresh insights to corporate processes as well as today’s changing marketplace.

In business, change is the only constant. The difficult process of reinvention can be a critical strategy in ensuring your company changes with the times.

How are you reinventing your company?